Electric car maker Tesla Motors plans to use a $34.7 million tax break from the state of California to help more than double annual production of its Model S electric sedans at its Fremont factory, SFGate reported Tuesday. Tesla currently is producing around 21,000 Model S cars per year at the plant, and plans to boost that by 35,000 cars — one of its biggest manufacturing ramp-ups since it first began making cars.
The state of California taxes most companies when they buy manufacturing equipment, but exempts a company like Tesla because of its greater environmental contribution and carbon emissions reductions. The $34.7 million in tax breaks is from sales and use taxes on $415 million worth of new manufacturing equipment, and the new production could create 112 new jobs. The company used the same tax breaks on $612 million worth of manufacturing when it first retooled the former NUMMI factory into its current state.
The tax breaks show how government support — this time at the state level — continue to help cleantech companies grow and produce jobs, despite the controversies involved. The Department of Energy gave Tesla a $465 million loan to help it move into production of its Model S and Tesla was able to pay back those funds many years early. But other less successful companies like Solyndra and Fisker — which both went bankrupt — have made government support of green companies controversial.